KNM moves into Latin America

KNM group Bhd has allocated RM30mil to set up a factory in Brazil that will see it making a foray into Latin America said managing director Lee Swee Eng.

 “We have already covered Asia Pacific and Oceania. Our next move is to Latin America,” Lee said, adding that the company wanted to take advantage of the huge potential for growth in Brazil.

 “We are bullish of the Brazil market. Brazil will act as a springboard to Venezuela, Argentina and other countries,” he said after a media briefing of the company’s third quarter financial results in Kuala Lumpur yesterday.

Besides Brazil, the group has also allocated RM20 million to set up a factory in Indonesia as part of its expansion plants.

“We have yet to decide on setting up new factories (in Brazil and Indonesia) or acquiring existing ones,” Lee said.

Lee expects details on the Indonesia factory to be finalised by year end while Brazil’s details will be ready by the first quarter of the next year. He said the factories would be set up through internal funding and bank borrowings.

The group currently has seven plants -  five in Malaysia (Malacca, Gebeng, Kuantan Port, Shah Alam and Bintulu) and one each in China (Changshu) and Dubai (Jebel Ali).

KNM’s current order book of RM430mil would sustain the group until the end of next year, lee said.

“Besides our healthy order book, we are also tendering for over RM3bil worth of jobs, 97% of which are overseas projects. We are confident that we can secure higher order book for next year based on our testimony and strong track records,” noted Lee.

“We hope to get all the projects but we are limited by our capacity currently stands at 46,500 metric tones per annum.

“Going forward, we are very positive on our outlook, backed by strong and healthy demand for equipment in the oil and gas, petrochemical as well as the mineral-processing industries. The industries and economic outlook too, augur well for future potential earnings and capacity expansion of the company,” lee said, adding that the recent surge in oil prices had improved profit margins for the company.

“The global demand for oil and gas was likely to continue to experience strong growth,” Lee said.

KNM, which released its third quarter results ended Sept 30, 2005, on Tuesday recorded a higher net profit of RM11.1mil for the third quarter compared with a net profit of RM4.4mil in the same period a year ago.  Its net profit and turnover jumped 149.6% and 125.5% respectively. Turnover stood at RM104.9mil, up from 46.5mil last year.

The company attributed its significant jump in turnover to higher manufacturing capacity and more job orders secured for the period under review.

“Improved profitability was largely due to the company’s strategy to move up the value chain and manufacture specialised  and high-end process equipment which contribute to higher margins,” Lee said.